A few links to some items I found of interest.
Jeff Miller explains why some analysts are misinterpreting a graph from Jeremy Piger that seems to point to increased probability of recession. In addition to the issues Jeff raises, if you check the original source for this graph, you’ll see it is based on data through October 29. I expect Professor Piger’s implied probability to come back down when the November 2 revisions to nonfarm payroll estimates are incorporated.
Greg Mankiw suggests a compromise on the fiscal cliff that could allow both President Obama and Speaker Boehner to save face: raise tax revenue from the rich without raising marginal rates. Paul Krugman takes an incomprehensibly stupid and reckless position. Bill McBride offers his predictions of how this will turn out: the AMT patch will come, the top marginal rate will be raised, and no extension of the payroll tax cuts. But he thinks none of it will come until early January, or after we have gone over the fiscal cliff. He suggests we refer to it instead as the “fiscal slope” or the “fiscal bluff”.
The Wall Street Journal reports that bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasuries, suggesting to me that investors attach some small probability that wrangling over the debt ceiling will result in payment glitches on Treasuries.
Michael Fleming calculates that the Fed’s emergency lending facilities earned $22 billion income for the taxpayers during the financial crisis.
The recent health care legislation requires that that large companies either provide health insurance for full-time workers or pay a fee. But the Wall Street Journal reports that some are taking a third route– shifting to more part-time workers.